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Lorraine Campos
Chris Haile
Rosamond Xiang
If I Ran the Zoo: Is Commercial Item
Procurement a New Wild Adventure?
188
• DFARS Final Rule on Commercial Items and the new DoD Commercial Item Guidebook
• Updates from FY 2018 NDAA and Section 809 Panel Report
• Transactional Data Rule and other changes to the GSA and VA Federal Supply Schedule Program
Agenda
189
• DFARS Case 2016-D006
• Implements sections of the National Defense Authorization Acts (NDAAs) for FYs 2013, 2016, 2018 – FY 2013: ref. § 831 – FY 2016: ref. §§ 851-53, 855-57 – FY 2018: ref. § 848
• Does not implement all changes from FY 2018 NDAA
• Does not implement changes from FY 2017 NDAA
DFARS Final Rule
190
Encouraging and Expanding Commercial Treatment
• Prior DoD commerciality determinations.
• Conversion from commercial to non-commercial procurement of an item.
• Supplies and services provided by “nontraditional defense contractors.”
• IT products / service purchases over the SAT.
DFARS Final Rule
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Burdens for commerciality and price-reasonableness determinations
• Prime contractor information.
• Subcontractor information.
• DFARS ‘hierarchy’ of information.
• Access to books and records.
DFARS Final Rule
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• New editions published in January 2018, following a draft distributed in Feb. 2017
• Published in two parts:
– Part A: Commercial Item Determination
– Part B: Commercial Item Pricing
DoD Commercial Item Guidebook
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• NDAA 2018 • Further review of current regulations on commercial
items (under Section 849 of NDAA 2018) including: – FAR council determinations not to exempt
contracts and subcontracts from certain procurement rules;
– DFARS regulations requiring specific clauses in FAR Part 12 clauses;
– DFARS regulations to assess all regulations that require a prime to flow-down clauses for COTS items.
• Section 809 Panel: recommendations on reforming laws and regulations concerning commercial items
• Draft bill of 2019 NDAA (H.R. 5515)
New Rules in the Pipeline: Sources of Change
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• Definitions:
– Commercial items/services
– COTS
– Subcontracts
• Flow-downs
• Supply chain management
• E-Commerce Portals
New Rules in the Pipeline: Potential Substantive Changes
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• Sec. 820-amends to the definition of a subcontract to exclude – “[A]greements entered into by a contractor for
the supply of commodities that are intended for use in the performance of multiple contracts with the Federal Government and other parties and are not identifiable to any particular contract.’’.
• Sec. 847 – Revision to Definition of Commercial Item
– Amends “nondevelopmental item” prong of definition
(Re-)Defining Commercial Items: NDAA 2018 Revisions
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• Separate "commercial item" into "commercial services" and "commercial products“;
• Merge definitions of commercial items and commercial off-the-shelf items;
• Establish a uniform definition of "subcontract" and "subcontractor."
(Re-)Defining Commercial Items: Section 809 Panel Recommendations
197
• Congress takes note of the Section 809 Panel Recommendations
• Sec. 831 would clarify commercial items as commercial products or commercial services.
• Sec. 832 would create one single definition for “subcontract”
(Re-)Defining Commercial Items: Draft 2019 NDAA
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• Section 807 of 2018 NDAA: Process for Enhanced Supply Chain Scrutiny—mandate for DoD to develop:
– Tools to support due diligence, business intelligence or otherwise analyze commercial activity
– Risk profiles of products or services – Integration with intelligence sources – Periodic review and assessment of software products and services – Synchronization of current authorities for making supply chain
decision or improved use of S&D officials – Coordination with interagency, industrial and international
partners to share information
• Section 809 Panel recommendations: – Establish preference for commercial items within supply chain – Limit the reach of flow-downs to lower-tier suppliers – Temper exclusionary policies (e.g., suspension and debarment)
against lower-tier contractors.
Managing the Supply Chain
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• Minimize mandatory flow-downs for commercial item contracts;
• Revise "termination for convenience" clauses for commercial item contracts;
• Revise DFARS provisions on data rights for commercial product.
Managing the Supply Chain: Flow-downs—Sec. 809 Panel
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• Sec. 833: limit applicability of certain executive orders and DoD regulations to DoD commercial contracts and subcontracts, to remove transactional barriers between DoD and commercial suppliers.
Flow-downs: Draft 2019 NDAA
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Section 846: Procurement Through Commercial E-Commerce Portals
• Requires a multi-phased program to be established to procure commercial (COTS) products through commercial e- portals to enhance competition, expedite procurement, enable market research and ensure reasonable pricing.
• Procurements from the portal shall be made: – to the maximum extent practicable, under the
standard terms and conditions of the portal to the maximum extent practicable
– Under the Simplified Acquisition Threshold
E-Commerce Portal: NDAA 2018
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E-Commerce Portal: NDAA 2018
90 Days
Develop Plan and Schedule
12 Months
Market Research
Consult agencies, suppliers and
portal providers
Assess data issues
Fee analysis
24 Months
Develop guidance
Develop protocols for
oversight
203
The Weighing Game
E-Commerce Portal: NDAA 2018
Commercial Solution in Section 846
Traditional Regulatory
Requirements
204
Unsettled Questions • How will the portals be selected? • Will this be similar to the VA Prime Vendor
Program? – Will portal holders have distribution contracts? – Fees? – flow-downs?
• How will program impact current federal contracts?
• Are there ecommerce marketplace options and distribution agreements?
• Some of the unknowns – risk and liability of e-commerce provider?
E-Commerce Portal: NDAA 2018
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• Established June 2016 – pilot program – Transactional level data on purchases made
through GSA contract vehicle
– Monthly reporting
– Elements reported include, but not limited to:
• price per unit of quantity sold
• total price sold
– Elimination of Price Reduction Clause (PRC) and Commercial Sales Practices (CSP)
Federal Supply Schedules Transactional Data Reporting Rule:
206
207
- Additional reporting requirements
- Questions regarding use of data
-“Apples to apples” comparison
-Limited liability (CSP & PRC)
-No impact on commercial sales
-Removal of tracking customer
Federal Supply Schedules Transactional Data Reporting Rule:
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• New Rule on GSA Incidental Supply Schedule purchases
• Trade Agreements Act and the Department of Veterans Affairs
• VA Strategic Acquisition Center – Medical Surgical Prime Vendor- Next Generation
Federal Supply Schedules
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Lorraine Campos (202) 624-2786
Chris Haile (202) 624-2898
Rosamond Xiang (202) 624-2613
QUESTIONS?
210
